DBM Secretary Wendel Avisado. (Screengrab from virtual briefing)
MANILA – Economic managers slashed their 2020 growth forecast for the Philippine economy from -5.5 percent to -8.5 to -9.5 percent given the movement restrictions put in place to address the rise of coronavirus disease (Covid-19) infections.
In a briefing Thursday, Budget and Management Secretary and concurrent Development Budget Coordination Committee (DBCC) chair Wendel Avisado said the 2021 gross domestic product (GDP) target was kept between 6.5-7.5 percent but the 2022 figure was hiked from 6.5-7.5 percent to 8-9 percent.
“The Philippines has endured the worst economic impacts of the Covid-19 pandemic through prudent fiscal management and evidence-based and decisive actions to address the global health emergency. As the economy gradually moves towards full reopening, we expect significantly better economic outcomes next year,” he said.
Domestic expansion, as measured by GDP, posted a 10 percent contraction in the first three quarters of this year, with the third quarter figure better at -11.5 percent from decades-low -16.9 percent.
Economic managers forecast the fourth quarter figure to be better than the previous three months as the government gradually re-opens the economy.
“We are also expecting further improvement in our fourth-quarter GDP numbers. As we carefully and proactively manage the risks, strong economic recovery and solid growth remain within our reach,” Avisado said.
Dubai crude oil price assumption for this year was adjusted from USD23-45 per barrel to USD40-42 per barrel while the 2021-22 assumptions were kept at USD35-50 per barrel.
The PHP51-54 peso-US dollar assumption was changed to PHP48-50 for this year and PHP48-53 for 2021-22.
The assumption for goods exports was kept at -16 percent for this year while it is at -20 percent for imports.
In terms of collection targets, revenues were upsized from PHP2.52 trillion to PHP2.85 trillion after both the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) exceeded their reduced goals for the year.
For 2021, revenues are projected to rise to PHP2.88 trillion and further to PHP3.31 trillion in 2022.
“The adjustments already factor in the expected impact from the implementation of the CREATE bill, as passed by the Senate,” Avisado said.
Corporate Recovery and Tax Incentives for Enterprises (CREATE) is aimed at reducing corporate income tax (CIT) by 5 percent, or from the current 30 percent to 25 percent, once the law takes effect. It is seen to help companies bounce back faster from the impact of the pandemic.
Government spending this year is seen to amount to PHP4.23 trillion, which accounts for about 23.3 percent of GDP.
The budget gap this year was revised from 9.6 percent of GDP to around 7.6 of total output. (PNA)
